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Confidence crunch - Funding the Future Survey
The fifth edition of our proprietary Funding the Future Survey shows investor confidence about the near-term outlook for venture capital (VC) activity has fallen further since March amid political risk and economic uncertainty. By contrast, the mood in public high growth equities remains relatively buoyant. Disruptive technology is a standout investment theme, with the speed of technological evolution, availability of key skills and talent, and changing consumer behaviour seen as major tailwinds.
Carried out by Survation from 23 May-20 June 2025, this survey captures the views of 276 global investors representing a significant portion of the VC and high-growth investment community. Survey participants represented a total AUM of USD3.46 trillion with 40% (about USD1.37 trillion) attributed to VC and private equity (PE) investors. The fieldwork period saw further announcements on trade tariffs, continued geopolitical conflicts including in the Middle East and Ukraine, and significant uncertainty over the future path of US growth, inflation, and monetary policy.
Against this backdrop, investor sentiment about the near-term outlook for VC/PE activity has deteriorated further. Just 30% of private market investors foresee an increase in activity over the next quarters, down from 47% in our previous survey in March 2025. This is the lowest reading since our series of surveys began in April 2024. Some 64% (down from 78%) see activity picking up over the coming year, suggesting confidence about the longer term is also fraying somewhat. Political risk, changes to the economic environment, and protectionism are seen as the top three risks to the outlook for VC/PE activity.
There is a marked contrast between private investors and those investing primarily in publicly listed companies, however. After a volatile April, public markets recovered momentum and seem to have become less responsive to tariff announcements. When it comes to the key tech sector, for instance, more public investors are bullish about the outlook for the next three months (66%) than their private counterparts (47%). What is more, investors in listed equities have grown more bullish on tech compared to our March survey at the same time as turning distinctly less bullish about healthcare, typically seen as a defensive sector.
We also asked respondents for their views on:
- Key tailwinds: the speed of technological changes and availability of key skills and talent remain key tailwinds for the private markets, according to our survey. A growing proportion (59%) now also see changing consumer behaviour as a tailwind. This is perhaps a byproduct of AI innovation as consumers increasingly adopt the technology.
- Key headwinds: According to our survey,.the surveyed population see political risk and economic environment as the top two headwinds (85% and 83% respectively).
- Nine themes: Among the investment themes we track at HSBC Global Investment Research, Disruptive Technology remains the standout favourite for survey respondents.
- Exits & IPO Trends: Some 49% of VC/PE investors are expecting an increase in IPO activity in the coming year (Chart 22), down from 58% in our previous survey. Despite this relatively muted outlook for IPOs, 83% of VC/PE investors say they are planning to exit one of their portfolio companies in the coming year, an increase from 65% in March. They seem to be looking to buyouts and trade sales as preferred exit avenues. The secondary market has become a key liquidity provider for private investors while the IPO market has remained sluggish.
- Funding and capital: 38% of VC investors responded saying most investments in their universe had been up rounds, similar to the last edition of the survey. The proportion of flat rounds increased from 24% to 27% this time around. This is understandable as we saw investor sentiment take a step back due to macroeconomic conditions and geopolitical environment. However, it’s still encouraging to see investors saying up rounds in their universe were higher than this time last year.
- Sustainability:Sustainability seems to be at something of a crossroads for investors, with different editions of our survey suggesting it is seen as a headwind and a tailwind. Currently, 59% see it as a headwind. However, this is not consistent across different regions. Asian and MENA investors see Sustainability as a tailwind, however North American and European investors view it as a headwind. Meanwhile, AI investments are growing as a proportion of Clean and Climate tech VC deals.
- Regional trends: Among the regional trends revealed by our survey, VC/PE sentiment in Asia is lower than elsewhere. Unlike other regions, EV and autonomous driving is a preferred vertical for investors in Asia, where sustainability is also strongly perceived as a tailwind. In Europe, the majority of investors anticipate exits over the year. AI, ConsumerTech and FinTech are preferred investor verticals in Europe.
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